On November 2, 2021, China Health (002004) issued a notice that: bank of China Securities Deng Zhouyu, Bank of China Securities Yang Zhiwei, Bank of China Securities Liang Duanyu, Chongyang Investment Hu Min, Industrial Fund Dai Pengju, Shangshi Investment Jia Pengfei, Hezheng Pratt & Whitney Investment Yuanfang, Bank of China Schroeder Fund, Delui Hengfengjiang Xin, Nanyin Financial Sheng, Huihua Financial Zhang Xin investigated our company on November 1st, 2021.

Q: the net cash flow of the company's operating activities in the first three quarters was 800 million yuan, which was lower than that in the same period last year. What is the main reason?

Answer: there are two main reasons: first, Kaisheng new materials and Yingtai biological products recently sell well, the market demand is strong, the company plans to increase product output, so it has carried out production preparation, and at the same time, the prices of some raw materials have risen, prompting subsidiaries to purchase raw materials in large quantities. The company's total inventory has increased from 1.95 billion yuan at the end of last year to 2.4 billion yuan, resulting in an increase in operating cash flow expenditure. Second, the tourism sector is seriously affected by the epidemic, performance decline, operating cash flow reduced. Therefore, the joint effect of the two aspects led to a decline in the net cash flow of the company's operating activities in the first three quarters compared with the same period last year.

Q: please introduce the operation of Kuanren Hospital in the third quarter.

A: Kuanren Hospital is a national third-level general hospital integrating medical teaching and research. It was officially opened in April 2020, with a total area of 215000 square feet and 1000 beds. Up to now, there are more than 30 clinical departments and platform departments, with a total staff of more than 700 people. In the third quarter of this year, Kuan Jen Hospital achieved a cumulative operating income of 80.5 million yuan, an increase of 15.81 million yuan over the previous quarter, an increase of 24.4% over the previous quarter. Among them, outpatient (emergency) income and hospitalization income increased by 33.5% and 22.4%, respectively, and the performance maintained sustained and rapid growth. In the third quarter, the average monthly number of out-patient (emergency) consultation reached 26700, an increase of 97% over the previous month, and the average monthly physical examination was nearly 4600, an increase of 205% over the previous month, and the number of diagnosis and treatment continued to rise. In the follow-up, the hospital will gradually achieve cash flow balance and net profit balance.

Q: it has been half a year since the opening of Beijing Huasheng Rehabilitation Hospital. How many beds have been opened at present and how is the development?

A: Beijing Huasheng Rehabilitation Hospital is a tertiary rehabilitation specialist hospital. It opened in May this year and approved 300 beds. Now it has actually opened 100 beds. On the basis of the integration of clinical rehabilitation, the hospital focuses on many advantageous disciplines, such as exercise rehabilitation, nerve rehabilitation, bone and joint rehabilitation, cardiopulmonary rehabilitation, child rehabilitation and so on. In the past half a year, Huasheng Rehabilitation Hospital has passed the preliminary examination of the qualification of designated medical institutions of basic medical insurance in Beijing, and at the same time has successively improved the establishment of basic disciplines and the establishment of teams. the completion of orthopaedics, neurology, cardiovascular medicine, digestive medicine, general surgery, general medicine and other diagnosis and treatment subjects, providing a guarantee for the comprehensive operation of the hospital next year and the follow-up. At present, the main business source of Watson Rehabilitation Hospital is to undertake the rehabilitation treatment of postoperative patients in public general hospitals. in the later stage, with the approval of medical insurance qualification, it will bring a large flow of patients to the hospital. The hospital focuses on stroke rehabilitation patients, chronic cardiovascular disease patients and elderly patients with bone and joint diseases. According to the above key subjects, the hospital has docked with key public general hospitals such as Tiantan Hospital, Oriental Hospital, Xuanwu Hospital, and deepened cooperation through expert rounds, visits, scientific research guidance, patient referrals, and other ways to establish a two-way referral green channel to form a rehabilitation grading diagnosis and treatment system.

Q: the medical sector of the company is gradually on the right track. what are the follow-up development plans?

A: around Kuanren Hospital, the company's future development goal is to establish a business layout of "1 comprehensive medical platform + N characteristic specialist centers + external empowerment". First, the company will rely on the existing high-quality doctor resources, discipline advantages and location advantages of Kuan Jen Hospital, and take the third-class A-Class Hospital as the standard to promote Kuan Jen Hospital to build a complete multi-disciplinary supporting and support system. finally, Kuanren will become a comprehensive medical service platform with excellent equipment, complete disciplines, comprehensive business and high medical level. Second, on the basis of the full maturity of the integrated medical service platform, the company will develop the hospital's characteristics and advantageous disciplines, such as heart and oncology, into a specialist center. make use of the basic medical care, detection and diagnosis, multi-disciplinary consultation and other facilities provided by the integrated platform, equipped with top medical teams, mainly to solve the diseases with great difficulty in treatment and high service value for patients. Third, on the basis of the mature technical and management capabilities of the integrated medical service platform, the company will strengthen cooperation with external small and medium-sized private hospitals and try to carry out hospital trusteeship or specialist co-construction business.

Q: how many stores does Mann skin plan to open? How much revenue and profits can a single store achieve when it matures?

A: Mann skin has been preparing since 2015, and set up its headquarters flagship store in 2016, then gradually tested and formed a perfect and replicable single-store profit model, and began to lay out chain organizations from 2019. So far, more than 30 chain stores have been opened across the country, and some chain organizations have made profits. In terms of future planning, Mann skin plans to set up 20 clinics in 20 provincial capitals, each with 10-20 prefecture-level satellite clinics and a total of 200-300 chain satellite clinics. Among them, the outpatient department set up in the central city, with an area of 1000 square feet, achieves 30 million yuan in revenue and 5 million yuan in net profit every year after maturity, and makes a profit in about 2-3 years. The clinic set up in the prefecture-level city, with an area of 300 square feet, achieves an annual revenue of 10 million yuan and a net profit of 1.5 million yuan after maturity, which can be profitable in about a year.

Q: when did National Healthcare Security Administration start collecting prescription drugs for skin? Does collection have a great impact on the company's performance? Thank you!

Answer: at present, there are few varieties of skin drugs included in the national collection, and the impact on the overall performance of the company is limited. (1) at present, the company does not simply do chemical generic drugs, but around the "big skin" layout of the whole industry chain, including raw materials, preparations, cosmetics, medical terminals, medical services, generic drugs are only part of the business. In the future, Huabang will rely on its leading position in the skin prescription market and rich doctor resources to further improve the industrial chain and actively develop the business of medical beauty and medical services. (2) due to the scale of drugs and the lack of consistent evaluation standards for topical preparations, the progress of integrating topical drugs into collection is relatively slow compared with other drugs. This gives Huabang further layout and adjustment, leaving a relatively sufficient time window. (3) the company has complete pipelines and many products in the skin field, and a product matrix is formed for most diseases. After drugs are included in the collection, the impact can also be reduced through the layout and promotion of alternative drugs. (4) Collection and acquisition is mainly aimed at the in-hospital prescription market. at present, the company is also making great efforts to develop the out-of-hospital market by making use of the existing time window. The company will start with brand chain pharmacies and e-commerce channels to improve terminal coverage and further enhance the market share outside the hospital. (5) in addition to the existing drugs, the company is actively promoting the research and development of new drugs, rolling projects of 3-5 products every year to ensure the continuous emergence of new products every year.

Q: which companies does the company currently cooperate with in the CDMO business? What are your development plans for the future?

A: relying on the advantages of long-term drug R & D and API / preparation integrated production, the company has carried out the whole industry chain layout of the CDMO business of API, preparation and bio-pharmaceuticals. At present, this business is in its infancy, and the company has reached cooperation with a number of well-known pharmaceutical companies. API CDMO: mainly through Huabang Shengkai and Hanjiang Pharmaceutical Co., Ltd. Longevity and Hanjiang international API production base is expected to be completed by the end of this year, when the company's overall API production capacity will be further increased. Preparation CDMO: layout through Huabang Pharmaceutical. Huabang Pharmaceutical Water and soil preparation production Base is equipped with information-based high-end intelligent manufacturing platform, which is one of the largest external preparation production bases in Southwest China. The process is mature and stable, and it has a professional CDMO R & D team, which can undertake external "external use, oral, aseptic" and other multi-dosage form projects. Biological drug CDMO: through the participation spectrum of new biology to achieve the layout. The 17000-year GMP production base was planned in Suzhou, Zhengzhou and Changchun, and the nucleic acid product process development platform, suspension serum-free virus culture platform and fully enclosed cell process development platform were built.

Q: the company transferred Yingtai biological equity and received a total of 800 million yuan. How does the company arrange it? Will you continue to increase investment in the main health care industry or consider buying back the shares of the company?

A: reducing the shareholding ratio of Yingtai Biology and introducing Xin'an shares as strategic investors is an important part of Huabang Health's "big health" development strategy of medicine and healthcare, which is conducive to Huabang Health's focus on its main business and is in line with the long-term development strategy. At the same time, it also contributes to the complementary and deep integration of Yingtai biology and Xin'an shares. It will promote cooperation between the two sides in technological research and development, production bases, market channels and industrial chain management, further optimize the product and industrial layout, and enhance the core competitiveness of Yingtai biology. The funds after the sale of Yingtai biological shares will mainly be used to promote the construction of the whole industry chain integrating raw materials, preparations, pharmaceutical makeup, medical and beauty service terminals, and medical institutions. At the same time, it can also be used to adjust the company's debt structure, reduce financial leverage and other uses.

Q: what is the layout of the company in the new energy industry?

A: Kaisheng Xincai, the company's holding subsidiary, is the largest manufacturer of thionyl chloride in the world. Its main product thionyl chloride can be used in the production of lithium battery LiFSI electrolyte with an annual production capacity of 120000 tons. Kaisheng new materials will continue to pay attention to the development of lithium battery industry in the future, market-oriented, customer-centered, strengthen the foundation, develop high-tech, and continue to do a good job in the integrated cycle industry chain of thionyl chloride chlorination. Thank you!

Huabang Health's main business: covering pharmaceutical and agrochemical products research and development, production, sales, medical services, tourism investment and operation business.

According to the third quarterly report of Huabang Health 2021, the company's main income was 8.629 billion yuan, up 9.4% from the same period last year; the net profit was 521 million yuan, up 1.3% from the same period last year; and the non-net profit was 471 million yuan, up 0.05% from the same period last year. In the third quarter of 2021, the company's main income in a single quarter was 2.882 billion yuan, up 6.37% from the same period last year; net profit in a single quarter was 168 million yuan, down 14.73% from the same period last year The non-net profit in a single quarter was 134 million yuan, down 24.71% from the same period last year; the debt ratio was 50.51%, the investment income was 192 million yuan, the financial expenses were 306 million yuan, and the gross profit margin was 39.2%.

The stock has no agency rating in the last 90 days. In the past three months, the net inflow of financing was 57.8644 million, and the financing balance increased, while the net inflow of securities was 1.3057 million, and the balance of securities lending increased. According to the Securities Star valuation analysis tool, Huabang Health (002004) good company has a rating of 2.5 stars, a good price rating of 2.5 stars, and a comprehensive valuation rating of 2.5 stars.